Committee reviews manufactured-home bill that restricts subleasing, clarifies registration and raises sales-tax exemption

The committee reviewed S.757, a wide-ranging bill that updates statutes governing manufactured (mobile) homes and limited-equity cooperatives and makes tax and registration changes intended to improve access to state funding and create parity in one-time tax treatment.

Cameron Wood of the Office of Legislative Council said the bill begins with technical drafting fixes and then clarifies definitions used throughout statute, including what it means for a manufactured home to be "permanently sited" (e.g., wheels removed, utilities connected, skirting installed). The bill codifies when a mobile/manufactured home financed as real estate must transfer by deed rather than by a bill of sale.

On limited-equity cooperatives, Wood said the bill affirms that these entities are organized to provide housing for households at low and moderate income (roughly 80–100% AMI). The measure would prohibit subleasing in cooperatives unless a member demonstrates a hardship and the board grants an exemption; any permitted sublease must be to a low or moderate income individual and limited to amounts necessary to cover legitimate costs (proprietary lease, mortgage, utilities).

The bill addresses a registry problem: the Secretary of State intermittently listed some limited-equity cooperatives as nonprofit corporations and others not, producing barriers when cooperative parks apply for state grants. To address that, the draft would treat limited-equity cooperatives "for purposes of state funding and grants" as the functional equivalent of state nonprofit corporations for one year, subject to a one-year sunset. The Department of Housing and Community Development would prepare a report identifying state funding, grant and loan programs available for park infrastructure and examine eligibility and regulatory barriers; the report would be submitted with proposed legislation after the year-long review.

Tax changes are a central fiscal element. Staff described an existing sales-and-use exemption for mobile and modular housing that effectively exempted about 40% of the sale; the bill would increase the exemption to 90% so that the effective one-time tax paid on purchases of manufactured homes (when treated as personal property) approximates the effective rate paid by buyers who acquire homes treated as real property under the property transfer tax. "When you take the total tax paid and back it into the number of transactions, the effective tax rate overall was 0.6%." said Burnett of the Joint Fiscal Office, explaining why the exemption was raised to 90%.

Burnett estimated the sales-tax exemption change would reduce education fund sales-tax revenue by about $200,000 in the half-year FY27 effect and roughly $500,000 annually thereafter absent policy adjustments. Staff said the sales/use changes would take effect Jan. 1 and that other exemptions (for energy-efficient homes, for example) were carried into the sales-tax language to preserve parity.

Committee members asked about zoning language to prevent bylaws that exclude mobile or prefab housing from districts allowing year-round residential use; members also raised questions about how the Secretary of State stopped classifying some cooperatives as nonprofits and asked staff for additional background and for affected parties (DHCD, Secretary of State, mobile-home park representatives) to testify.

The committee agreed to give members time to review the complex package and asked staff to return with additional information and stakeholder testimony next week.